The housing market in 2021 has been characterized by steady growth in price. Double-digit rental increases and a greater demand for housing than there is supply is the new normal. Both the fluid renter migration patterns due to Covid and the “work from home movement” have added to the shift in demand and housing deficits in certain markets. Also, this new paradigm shift is creating opportunities in other markets nationwide.
In February 2022, rent growth across the country hit 17.1% year-over-year for 0–2-bedroom properties, and the median asking rent reached $1,792. It is the seventh consecutive month with double-digit growth. It is about four times as fast as the growth rate seen before the pandemic hit in March 2020. For the first time in the past 12 months, yearly rent growth slowed relative to the month before but is otherwise higher than any other month.
☛In this article, we’ll take a quick peek at the following:
- The Top 10 National Markets for Rent Increases
- The Top 10 Highest Rise in Home Values
- The Top 10 Sun Belt Markets for Rent Increases
Let’s begin by discussing what makes a real estate market a “Hot Market.”
☛Criteria investors look for in a hot real estate market include
- Home values and appreciation
- Rent increases
- Population growth
- Job and industry growth.
☛Real estate markets with the highest home price appreciation include
- San Tan Valley
- Surprise, AZ
- Hollywood, FL.
☛Top Sun Belt Markets with the biggest rent increases this year include
- Miami-Fort Lauderdale-West Palm Beach, FL
- Orlando-Kissimmee-Sanford, FL
- Tampa-St. Petersburg-Clearwater, FL
☛Top National Markets with the biggest rent increases this year include
- Punta Gorda
- Fort Walton Beach, FL
- and Cumberland, MD.
☛What makes a real estate market a “Hot Market”?
Real estate investors are always seeking cash flow and long-term growth. They also consider more than the square footage and size of the home. A savvy investor takes a full view of the complete story behind an investment. Here are a few to keep in mind.
☛Investor Key market metrics to analyze include:
- Local Median home value
- Market Appreciation in home values
- Days on market before going under contract
- Rent to own ratio
- Rent to price ratio
- Tracking rent increases
- Local Vacancy rate
- Housing affordability
- Population density and growth rate
- Job growth rate
- Local industry
- Unemployment rate
The need for rental property is propelled by factors such as in-migration, local economic growth, and lack of housing inventory. When the need for housing increases in a market where home prices are rising and supply is low, the demand for rental property generally increases, giving a property owner lateral freedom to increase rents.
☛Top 10 Highest Rise in Home Values
Forbes and Redfin recently compiled a list of the top real estate markets. The list included markets with the highest year-over-year rent increases. It also included the biggest rise in home values. The list below is a culmination of that data. Other market figures such as population and job growth come from Census Reporter and RENTCafé as of December 2021. These are the top 10 cities with the highest percentage variation in median home prices from October 2020 to October 2021, according to Redfin.
☛Top 10 Highest Rise in Home Values Ranked
|Rank||City||Home Value Increase||Median Selling Price||Contract Time Span||Sells Above list|
|1||San Tan Valley, AZ||37.8%||$410,000||7-24 Days||2%-4% above|
|2||Hollywood, FL||37.0%||$400,000||22-51 days||3% below|
|3||Surprise, AZ||34.9%||$425,000||8-26 days||@ List|
|4||Cape Coral, FL||33.2%||$360,000||10 days||0.3% below|
|5||St. Augustine, FL||32.3%||$403,554||34 days||@ List|
|6||Riverview, FL||30.7%||$347,000||3-5 days||2%-4% above|
|7||Port St. Lucie, FL||30.1%||$336,000||35 days||@ List|
|8||Detroit, MI||30.0%||$78,000||27 days||2% above|
|9||Boise, ID||29.9%||$495,000||5-14 days||@ Just Under List|
|10||Murfreesboro, TN||28.9%||$385,000||4-10 days||2.6% above|
☛The Top 10 National Markets for Rent Increases
Briefly in the middle of the Covid pandemic, rent prices were dropping with phenomenal deals. Landlords in major cities were offering a month or two of free rent. But that was a momentary glitch as rental rates across the country began climbing at an alarming rate. Dozens of cities have been experiencing double-digit growth.
☛The price hikes are driven by several factors:
- an increase in people wanting to live on their own (called household formation)
- People moving back to cities
- Lack of housing supply and a general rebound in the economy.
Rising demand is giving landlords the latitude to push rents higher, especially as new supply was also hampered by pandemic quarantines,”George Ratiu, senior economist at Realtor.com
According to a recent report by Apartment Guide, the average nationwide rent prices have exceeded 10% year-over-year (YOY) for both one- and two-bedroom apartments, as of August 2021.
- Commonly, a one-bedroom apartment is now 10.8% more expensive this year than last
- Costing renters around $1,663 per month – For two-bedroom apartments which have risen in popularity
- Currently, rent is on average $1,949 per month—a 10.1% YOY increase.
“With remote work here to stay, renters want larger spaces, which can accommodate a home office,” Ratiu says.
“With remote work here to stay, renters want larger spaces, which can accommodate a home office,”George Ratiu, senior economist at Realtor.com
☛The Top 10 National Markets for Rent Increases Ranked
|Ranked||City||Population||Rent Increase||Median Home||Median Rent||Occupied by Renters||Median Income||Median Age|
|1||Punta Gorda, FL||19,571||31%||$325,800||$2,795||18%||$54,652||60.2|
|2||Fort Walton Beach, FL||22,084||24%||$185,900||$1,700||43%||$62,627||39.1|
|5||Port St. Lucie, FL||189,396||21%||$207,200||$2,245||23%||$62,608||48.2|
|10||Palm Beach, FL||8,723||18%||1,177,100||$5,634||15%||$141,348||70.6|
☛Top 10 Sun Belt Markets for Rent Increases – February 2022
The Sun Belt real estate has been sizzling for a few years. From 2012 to 2021, the Sun Belt metro areas are among the top 50 growing metro areas. They have seen an average of 12% population increase and that is 4%s higher than the top 50 markets. This has been a key factor in accelerating the competition in the real estate market.
According to Realtor.com ‘s Hottest Housing Markets report, housing markets in Orlando, FL, Miami, FL, and San Diego, CA saw the largest jump in hottest rankings in February 2022.
Additionally, the recent investor report showed that Sun Belt metros such as Miami, FL, Charlotte, NC, Phoenix, AZ, Tampa, FL and Jacksonville, FL were among the top markets that attract investors to compete with homebuyers.
In February 2022, Sun Belt metro areas continued to see the most rapid year-over-year growth for 0–to 2-bedroom rental properties. This has also been a similar trend in the January rental reports. Among the top 50 largest metropolitan areas, 23 of them are in the Sun Belt regions, with an average year-over-year growth rate of 22.5% (vs. 17.1% nationwide). Miami, FL was the fastest-growing metro area in both the Sun Belt and across the top 50 metros in February, with the median rent increasing 55.3% year-over-year. The other Sun Belt metros topping the list of fastest-growing rents include cities like Orlando, FL; Tampa, FL; Austin, TX; San Diego, CA; Las Vegas, NV; Phoenix, AZ; Jacksonville, FL; San Antonio, TX; and, Memphis, TN.
☛Top 10 Sun Belt Markets for Rent Increases Ranked– February 2022
|RANK||METRO AREA||MEDIAN RENT||AVERAGE RENT INCREASE|
|1||Miami-Fort Lauderdale-West Palm Beach, FL||$2,929||55.3%|
|3||Tampa-St. Petersburg-Clearwater, FL||$2,098||32.3%|
|4||Austin-Round Rock, TX||$1,773||28.1%|
|5||San Diego-Carlsbad, CA||$3,008||25.4%|
|6||Las Vegas-Henderson-Paradise, NV||$1,600||25.1%|
|10||San Antonio-New Braunfels, TX||$1,379||23.4%|
It’s often the case that rising home prices lead to rising rents. For example, both Boise and Port St. Lucie made the top 10 list for the highest change in home prices and the biggest increases in rents.
As per Forbes, Boise has been booming, largely because of population inflow from California. Over the last three years, the population grew 8%, a huge amount. This put a lot of pressure on housing, both single-family homes and rentals. The average rent rose 30% and home prices soared 60%. The increase in population echoing across the country in some markets leaves first-time buyers sidelined. They are sidelined because they can’t afford rising home prices in markets like Boise and it forces them to rent instead.
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